WTF is Bitcoin?!

8 years ago, in 2009, Bitcoin creator Satoshi Nakamoto released a whitepaper for a system which would forever change the way we make transactions. Nakamoto proposed that we started making transactions peer-to-peer instead of using middle hands like banks and other financial institutions. This would make sending money and making payments quicker, more seamless and a lot cheaper.

For example, if I wanted to send 115 dollars from Sweden to Australia, I would have to pay a fee of 2.5% and my money would arrive in Australia 3 days later! That’s insane!

Bitcoin and other cryptocurrencies enables transactions like this to be instant and cheap by using cryptography and advanced mathematical calculations (hence the name “crypto”currency). Community is what makes a system like Bitcoin possible, everyone using cryptocurrencies are contributing to its development. 


“At its core, bitcoin is a smart currency, designed by very forward-thinking engineers. It eliminates the need for banks, gets rid of credit card fees, currency exchange fees, money transfer fees, and reduces the need for lawyers in transitions… all good things.”


- Peter Diamandis


The cookie and the pastry chef
Let’s exemplify this with the transaction of a cookie between you and me. I can give the cookie to you instantly and without paying any fees. You receive the cookie instantly. There is no need for a pastry chef or a café to be a middle hand in this transaction since you know I gave it to you. The cookie is yours now and you can do whatever you want with it. Eat it, throw it away, trade it for a glass of milk. I don’t know, it’s your decision. After this transaction, you have one cookie and I have zero. But what if I change my mind and want the cookie back? Can I claim the cookie still is  mine and I never gave it to you? Can I claim you took it from me?

No.

The reason for this is because me giving you the cookie was watched by hundreds of thousands of people, everyone saw me giving the cookie to you. In bitcoin transactions this is what makes it a stable system, everyone in the network verifies transactions and every transaction is recorded on what is called a ”public ledger”.

So when I send my 0.0103697 BTC (or 115 usd) it is recorded on the public ledger and everyone can see that this transaction happened. This massively reduces the risk of fraud and it is immensely difficult to change the ledger retroactively. 


More reasons why Bitcoin is exciting 
There is a limited amount of bitcoins. There will only ever be 21 million of them, making it a deflationary currency rather than an inflationary currency like all FIAT- money. The governments of the world just keep printing more money every year, making the money you currently own and are saving, less and less valuable. Since there will only ever be 21 million Bitcoin and the demand will only rise, the price will keep going up, making each bitcoin increase in value.

There is no way of creating more Bitcoin. At the rate we are mining bitcoin, we probably wont be around to witness the final bitcoin be mined. This is due to the fact that the cryptographic problems become exponentially more difficult the nearer the end we come, meaning that it will take more time and more computing power to solve for the last bitcoin. 

I should also add that Bitcoin is decentralized meaning that no one owns it. There is no person or organisation that owns Bitcoin. Just like the Internet, it is decentralized, maintained by the community and developed by its users. 


To make a long story long
Satoshi Nakamoto created a system which would forever change how we make transactions. Bitcoin has already been adopted by many which means you can actually purchase things with Bitcoin. And just like with FIAT currency, there are bad and good purchases with cryptocurrency. Back in 2010 an early adopter of Bitcoin purchased two pizzas for 10 000 BTC. In todays value, those Bitcoins are worth over 100 million usd. 

Cryptocurrency is a safe way to make transactions cheaper, quicker with a minimal risk of fraud. It is decentralized meaning that no one owns it. It has the potential to change the financial world as we know it since it essentially eliminates the need for banks. I’m excited to see what the future has in store for Bitcoin and other  cryptocurrencies.


I will see you all in a bit(coin)!